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Labor Market Not Overly Tight, Demographically Adjusted Measure Shows

December 2018

Carlos E. Zarazaga and Emil Mihaylov

Abstract: Elevated inflation traditionally accompanies prolonged low unemployment rates, such as those currently observed in the U.S. However, price pressures have remained comparatively restrained, prompting further examination. The labor input utilization rate— the proportion of total hours individuals devote to work—provides insight when demographically adjusted, particularly when accounting for aging baby boomers. The indicator suggests the labor market wasn’t overly tight in second half 2018.

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